What we learned from the 2009 financial crises in emerging countries
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During the quiet times of stable and rapid growth, economists tend to think that they totally master their discipline and that they have converged towards a correct understanding of macroeconomic dynamics. Similarly policymakers do not engage into any major institutional reform because they extrapolate the current performance over a long period: why should they announce possibly unpopular measures whereas the economy is in such a good shape? This was precisely the intellectual and political context during the Great Moderation of the early 2000s: the quality of economic policy and the sophistication of the modern financial systems had provided a rather rapid growth with low inflation. Economic crises seemed to belong to the past or to be relegated to few exotic and distant countries that refused to adhere to the conventional wisdom of the Washington Consensus.